with
Francesco
Giovannoni
September 2008
Although the theoretical literature on political influence uses lobbying
and corruption interchangeably, the
attendant empirical literature associates lobbying with the preferred mean
for exerting political influence in
developed countries and corruption with the preferred one in developing
countries. This paper challenges
these views. Based on whether influence is sought with rule-makers (lobbying)
or rule-enforcers (corruption),
we develop a conceptual framework that highlights the defining impact of
political institutions on lobbying
and corruption. We test our predictions using 2002 survey data for 6000
firms in 26 countries. Our results
show that (a) lobbying and corruption are indeed fundamentally different,
(b) political institutions play a major
role in determining whether firms choose to lobby or corrupt, (c) lobbying
is a more effective instrument for
political influence than corruption, and (d) lobbying is a stronger explanatory
factor for firm performance than
corruption, even in poorer, often perceived as highly corrupt, less developed
countries.
Download working paper version: IZA DP (this one is FREE!!!) CEPR DP (this one isn't...)
Featured in a VOX column charmingly entitled "Corruption
happens, lobbying rules"